We recently leased a new storefront and are building out the store on our own with some help from contractors. Supplies, etc. are adding up - how do I account for this?

We are wondering if we should capitalize or expense these transactions. Supplies are slowly adding up (from $250 - $2,000) and then we will also be paying for assets such as refrigerator, etc.

1007

1 Best answer

Level 1

Jun 3, 2019 11:35:50 AM

Generally, any expenses that are expected to have a life less than a year are expensed, with anything more than a year capitalized and depreciated.

The link below goes into greater depth on expenses versus capitalization for small businesses according to the IRS:

https://www.irs.gov/businesses/small-businesses-self-employed/tangible-property-final-regulations

Level 1

Jun 3, 2019 11:35:50 AM

Generally, any expenses that are expected to have a life less than a year are expensed, with anything more than a year capitalized and depreciated.

The link below goes into greater depth on expenses versus capitalization for small businesses according to the IRS:

https://www.irs.gov/businesses/small-businesses-self-employed/tangible-property-final-regulations

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We recently leased a new storefront and are building out the store on our own with some help from contractors. Supplies, etc. are adding up - how do I account for this?